Following up on prior work that identified the perineural microenvironment as a regulator of hair follicle stem cells, we have completed a project describing a perivascular niche for hair follicle stem cells. Moreover, we have identified that sensory touch domes in the skin, and the Merkel cells housed there are also regulated by associated Shh signaling from sensory neurons. We have continued experiments demonstrating that touch domes are a novel and distinct cell lineage within the skin maintained by their own stem cell population. We have also investigated the developmental requirements for Merkel cell formation in skin. We have found that establishing the Merkel cell touch dome lineage in embryonic skin requires a cascade of Wnt, Eda, and intraepithelial Shh signaling.